Introduction to Management

What is Management?

All managers work in organizations. Organizations are collections of people who work together and coordinate their actions to achieve a wide variety of goals. Function of management includes planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently.

Resources include people, skills, know-how and experience, machinery, raw materials, computers and IT, patents, financial capital, and loyal customers and employees

Managers

Managers are the people responsible for supervising the use of an organization’s resources to meet its goals.

Organizational Performance

A measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals. Efficiency means a measure of how well or how productively resources are used to achieve a goal. While effectiveness means a measure of the appropriateness of the goals an organization is pursuing and the degree to which they are achieved.

High-performing organizations are efficient and effective

Why study management?

1. The more efficient and effective use of scarce resources that organizations make of those resources, the greater the relative well-being and prosperity of people in that society.

2. Helps people deal with their bosses and coworkers

3. Opens a path to a well-paying job and a satisfying career

Four Functions of Management

Decisional Roles

Roles associated with methods managers use in planning strategy and utilizing resources.

· Entrepreneur—deciding which new projects or programs to initiate and to invest resources in.

· Disturbance handler—managing an unexpected event or crisis.

· Resource allocator—assigning resources between functions and divisions, setting the budgets of lower managers.

· Negotiator—reaching agreements between other managers, unions, customers, or shareholders.

Interpersonal Roles

Roles that managers assume to provide direction and supervision to both employees and the organization as a whole.

· Figurehead—symbolizing the organization’s mission and what it is seeking to achieve.

· Leader—training, counseling, and mentoring high employee performance.

· Liaison—linking and coordinating the activities of people and groups both inside and outside the organization.

Informational Roles

Roles associated with the tasks needed to obtain and transmit information in the process of managing the organization.

· Monitor—analyzing information from both the internal and external environment.

· Disseminator—transmitting information to influence the attitudes and behavior of employees.

· Spokesperson—using information to positively influence the way people in and out of the organization respond to it.

Levels of Management

1. First line managers - Responsible for daily supervision of the non-managerial employees who perform many of the specific activities necessary to produce goods and services.

2. Middle managers - Supervise first-line managers. Responsible for finding the best way to organize human and other resources to achieve organizational goals.

3. Top managers – Responsible for the performance of all departments and have cross-departmental responsibility, establish organizational goals and monitor middle managers, decide how different departments should interact, and ultimately responsible for the success or failure of an organization

4. Chief executive officer (CEO) is company’s most senior and important manager. Central concern is creation of a smoothly functioning top-management team, such as CEO, COO, and department heads

Managerial Skills

· Conceptual skills - The ability to analyze and diagnose a situation and distinguish between cause and effect.

· Human skills - The ability to understand, alter, lead, and control the behavior of other individuals and groups.

· Technical skills - Job-specific skills required to perform a particular type of work or occupation at a high level.

Core Competency

Specific set of departmental skills, abilities, knowledge and experience that allows one organization to outperform its competitors.

Challenges for Management in a Global Environment

· Rise of Global Organizations

· Building a Competitive Advantage

· Maintaining Ethical Standards

· Managing a Diverse Workforce

· Utilizing Information Technology and Technologies

· Global Crisis Management

Discussion Question

What is the biggest challenge for management in a Global Environment?

A. Building a Competitive Advantage

B. Maintaining Ethical Standards

C. Managing a Diverse Workforce

D. Global Crisis Management

Choose one of the industries that you familiar with and then discuss through all challenges.

Solution: There is no one correct answer. It will depend on the firm and it’s industry. Some firms need to spend more time with ethics, others with building a competitive advantage, etc. Students should be prepared to discuss based on an industry they are familiar with.

Assessing External Environments

External environment: a wide variety of forces and institutions outside the organization that can influence its performance.

Industry Environment

It has largest influence on the organization. It also influence on competitive and strategic position of an organization. The best analysis of industry is Michael Porter’s Five Forces model. The model contains 5 industry environment forces that can influence the performance of the organization.

Five Forces Model

1. Competitors and the nature of Competition

· How big/strong your competitors are?

· Find the weaknesses of your competitors

· If you are small, you may choose to stay out of their way

2. New Entrants

· New entrants will increase competition, which, in turn, lead to lower profit

· Companies are forced to give a great value to customers, otherwise they may lose to new company

· When customers has more choices, it is said to have low switching costs

· Switching costs: expenses in terms of time, effort, and money to change from one supplier to another

· The best way to prevent the new comer is building entry barriers – cost advantage, government regulation, control of resources, etc.

3. Substitutes

Substitutes are alternative products or services can substitute for the existing product or service. For example, flying industry severely hurts the bus industry, especially in the country with huge area, such as Russia, USA, Canada, Australia, etc.

4. Customers

If there are relatively few customers and these customers are united, they have more power to demand lower prices, customized products or services. The more power they have, the more lower profit you get (they want a good product with low price).

For instance, De Beers purchases almost 80% of the world’s diamonds. As a diamond mining company, you are unlikely to make big profits because they basically determines the price they will pay for your diamonds.

5. Suppliers

If there are relatively few suppliers and they are united, they have more power to place demands on producers. The greater the power of suppliers, the lower the industry profits.

For example, Airbus A380 costs approximately US$403.9 million, so airline companies need to lower other costs to offset the high price paid to Airbus. This lead to profitability decline.

Domestic External Environment

Macro environment: the broader environment in which a firm finds itself that affects not just the industrial firm but the industry it is in.

1. Economic forces

· Current conditions: level of inflation and interest rates

· Economic cycles: travel industry - season

· Structural changes: the shift from an agricultural to industrial economy

2. Sociocultural forces

· Demographics: average age, birth rate, education, etc.

· Societal values: extend to which the products or services your firms provides have a market.

3. Legal and political forces

· Legal: i.e. new pollution laws increased the operating costs of coal-burning power plants.

· Political aspects: government spending may affect gross domestic product.

· Gross domestic product: the total economic value produced within the national borders of a given country.

4. Technology forces

· Product technological changes: lead to new products, features, or capabilities.

· Process technological changes: changes that alter how products are made or how firms are managed.

The International Environment

The importance of international environment depends on the organization’s size and scope of business. For small businesses: the domestic environment may generally be more important since they serve only for local level. For medium-size and large firms: the international environment is more important since the international sale is part of their total sales.

Examples of international environment include…

1. Trade agreement: trade bloc – ASEAN, NAFTA

2. Risk: country risk and political risk - civil war, coup

3. Economic development and instability: financial crisis

Group Activity

Choose one product that you like and analyze its industry environment. Also draw the five forces model.

Managing Within Cultural Contexts

What Is Culture?

To understand the differences between domestic and global management, it is necessary to understand the primary ways in which cultures around the world vary. Culture is…

· Something that is shared by all or almost all members of some social group.

· Something that the older members of the group try to pass on to the younger members.

· Something that shapes behavior or structures one’s perceptions of the world.

Cultural Orientations

The cultural orientation of the society reflects the complex interaction of values, attitudes, and behaviors displayed by its members. Individuals express culture and its normative qualities through the values that they hold about life and the world around them (Adler 1997).

How Do Cultures Vary

As shown in the following table, six basic dimensions describe the cultural orientation of societies: people’s qualities as individuals, their relationship to nature and the world, their relationship to other people, their primary type of activity, and their orientation in space and time.

Values Orientation Dimensions

Perception of

Dimensions

Individual

Good

Good and Evil

Evil

World

Dominant

Harmony

Subjugation

Human relations

Individual

Laterally extended groups

Hierarchical groups

Activity

Doing

Controlling

Being

Time

Future

Present

Past

Space

Private

Mixed

Public

How culture influence management?

Hofstede (1980) undertook a comprehensive study on worldwide sociocultural factors influencing management. Hofstede’s research compared work–related attitudes across a range of cultures. From his survey of 116,000 employees in 40 countries, Hofstede isolated 4 major dimensions which were congruent with different cultural values of specific countries. These socio–cultural factors were:

1. Power distance

The extent to which people accept power and authority differences among people

· Low PD: everybody are equal, hierarchies exist only for admin. Convenience

· High PD: accept inequality and hierarchies

Low Power Distance

High Power Distance

People at various levels feel less threatened and more prepared to trust others

Other people are potential threat to one’s power and rarely can be trusted

Latent harmony between the powerful and the powerless

Latent conflict between the powerful and the powerless

Employees less afraid of disagreeing with their boss

Employees fear to disagree with their boss

Managers seen as showing more consideration

Managers seen as showing less consideration

Employees show more co-operation

Employees reluctant to trust one another

Co-operation among the powerless can be based on solidarity

Co-operation among the powerless is difficult because of the low faith in people norm

Stronger perceived work ethic; strong disbelief that people dislike work

Weaker perceived work ethic: more frequent belief that people dislike work

2. Individualism-Collectivist

Describes the degree to which individuals are integrated into groups.

· High Individualism: people should largely remain independent from groups. Focus on the self-interest of individual.

· Low Individualism (Collectivist): focus on group interest.

Low Individualism

High Individualism

Involvement of individuals with organization is primarily moral

Involvement of individuals with organization is primarily calculative

Employees expect organizations to look after them like family

Organizations are not expected to look after employees form cradle to grave

Organization has great influence on members’ wellbeing

Organization has moderate

influence on members’ wellbeing

Emotional dependence of individual on the organization

Emotional independence of

individual from the organization

Private life is invaded by organizations and clans to which one belongs

Everyone has a right to a private

life and an opinion

3. Masculinity

Masculine societies value activities focused on success, money, and possessions. Feminine societies value activities focused on caring for others and enhancing the quality of life.

4. Uncertainty avoidance

High uncertainty avoidance favors efforts to gain stability through rules and other formal systems. Formal codes and review procedures are compatible with high uncertainty avoidance. Problems occur in ethics management due to unknown in workings and outcomes.

Managing cultural diversity for competitive advantage

· Cost: As organizations become more diverse, the cost of a poor job in integrating workers will increase.

· Resource Acquisition: Companies with the best reputations for managing diversity will win.

· Marketing: The insight and cultural sensitivity that members from other cultures bring should improve marketing efforts.

· Creativity: Diversity of perspectives and less emphasis on conformity to norms of the past should improve creativity

· Problem solving: analysis is the better way to make a decision

· System flexibility: less determinant, less standardized, and more fluid

Ethics and Social Responsibility

Defining Ethics

Ethics provide the basic rules or parameters for conducting any activity in an “acceptable” manner. Ethics represent a set of principles prescribing a behavioral code that explains what is good and right or bad and wrong. Additionally, ethics may outline moral duty and obligations. Problem is that the definition is a static description, so the dilemma might occur when implement in changing environment.

Moral Intensity in Ethical Decision Making

A degree to which we see an issue as an ethical one

· Magnitude of the consequences: the level of impact anticipated with the outcome of a given action. Ie. Laying off 100 employees because of a downturn in the economy has less impact than laying off 1,000 employees .

· Social consensus: whether the members agree that an act is either good or bad. Ie. Driving drunk

· Probability of effect: how likely people think the consequences of an action are.

· Temporal immediacy: the time interval between the time action occurs and the onset of its consequences. Ie. The result of global warming in 50 years

· Proximity: the closeness of the decision maker to those affected by a decision

· Concentration of effect: the extent to which consequences are concentrated on a few individuals or dispersed across many. Ie. Laying off 1,000 people in a town of 5,000

Code of ethical conduct

A formal statement typically one to three pages in length outlining types of behavior that are and are not acceptable

Example of ethics in classroom;

· Respect for another’s work

· Be punctual

· No plagiarism

Corporate Social Responsibility

· Management’s consideration of profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance.

· Contributions to the overall economy, job opportunities, and charitable contributions and service.

· Organizations measure through social audits.

Area of Responsibility

1. Responsibilities to the General Public

· Public Health Issues. What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids.

· Protecting the Environment. Using resources efficiently, minimizing pollution.

· Recycling. Reprocessing used materials for reuse.

· Developing the Quality of the Workforce. Enhancing quality of the overall workforce through education and diversity initiatives.

· Corporate Philanthropy. Cash contributions, donations of equipment and products, and supporting the volunteer efforts of company employees.

2. Responsibilities to Customers

· The Right to Be Safe. Safe operation of products, avoiding product liability.

· The Right to Be Informed. Avoiding false or misleading advertising and providing effective customer service.

· The Right to Choose. Ability of consumers to choose the products and services they want.

· The Right to Be Heard. Ability of consumers to express legitimate complaints to the appropriate parties.

3. Responsibilities to Employees

· Workplace Safety. Monitored by Occupational Safety and Health Administration.

· Quality-of-Life Issues. Balancing work and family through flexible work schedules, subsidized child care, and regulation such as the Family and Medical Leave Act of 1993.

· Ensuring Equal Opportunity on the Job. Providing equal opportunities to all employees without discrimination; many aspects regulated by law.

· Age Discrimination. Age Discrimination in Employment Act of 1968 protects workers age 40 or older.

· Sexual Harassment and Sexism. Avoiding unwelcome actions of a sexual nature; equal pay for equal work without regard to gender.

4. Responsibilities to Investors

· Obligation to make profits for shareholders.

· Expectation of ethical and moral behavior.

· Investors protected by regulation by the Securities and Exchange Commission and state regulations.

Planning

Types of Plans

· Strategic plans: focus on the broad future;

External Environment Demands + Internal Resources = Actions

Mangers need to take to achieve the long-term goals.

· Tactical plans: plans that translate strategic plans into specific goals; shorter time frames and narrow in scope

· Operational plans: plans that translate tactical plans into specific goals for small units of the organization; 12 months or less

Key Differences

Strategic Plans

Tactical Plans

Operational Plans

Time horizon

Typically 3-5 years

1-2 years in the future

Next 12 months or less

Scope

Broadest; entire organization

Rarely broader

Narrowest; centered on departments or small units

Complexity

The most complex; cover differences of industries

Somewhat complex but more specific; more limited domain of application

The least complex; focus on small units

Impact

Dramatically impact; the fortunes and survival of organization

Can affect specific businesses

Restricted to specific department

Interdependence

High interdependence; account the resources and capabilities of the entire organization

Moderate interdependence; account the resources of several units within a business

Low interdependence; plan may be linked to tactical but less interdependent with them

Organizational Levels

The Planning Process

1. Analyzing the Environment

· Forecasts: assessing the environment that could affect the organization, such as forecasting interest rates.

· Environmental uncertainty: unknown changes in key factors that can affect the business, such as the change in exchange rate. In this case, contingency plans could help you to identify key factors that could affect the desired results and specify what different actions will be taken if changes occur.

· Benchmarking: investigation of the best results among competitors and noncompetitors and the practices that lead to those results. Ie. Higher revenue

2. Setting Objectives

· Set priorities and multiples objectives

· Measurement of objectives whether the objectives has been met or not.

3. Determining Requirements

· What will it take to get from here to there?

· The “there” is the objectives while the “here” requires an assessment or knowledge of where the organization is today.

4. Assessing Resources

· Resources required: What resources are needed to produce a product?

· Resources available: What resources are available to meet those objectives?

5. Developing Action Plans

· Sequence and timing of the various specific steps in the plan. Look at the Gantt Chart below

6. Implementing Plans

· The success of implementation can be assured by following the planning process.

· Monitoring implementation: consider these factors;

· Progress of the plan: are those responsible for taking actions aware of their responsibilities and the timing of them?

· Level of support: providing support, such as encouragement, funds, coaching for the implementation?

· Time adjustment: adjust you timeframe with changing environments

7. Monitoring Outcomes

· Monitoring outcomes in order to achieve higher objectives.

· For example, you may discover that the machine that you buy can produce more productivities. In this case, you can increase you product volume as well as get the high quality of products.

Group Activity

Search about “ThaiNamthip Ltd.” Analyze and give examples of their strategic plans, tactical plans, and operational plans. Also draw the organizational levels.

Strategic management

Strategic Management is a type of planning in which;

· The organization’s general direction and objectives are determined,

· A plan is formulated and implemented to achieve the objectives, and

· The results are monitored and necessary adjustments made.

Strategic Intent

What an organization ultimately wants to be and do; the first step in the strategic management process.

For example, Kellogg’s strategic intent is to enrich and delight the world through foods and brands that matter.

Mission

Purposes of the organization, often contain several components, such as company philosophy, identity (self-concept), principal products or services, customers and markets, geographic focus, obligations to shareholders, and commitment to employees.

Organizational Analysis

The Value chain

1. Primary activities

Primary activities are business activities that are directly involved in the creation of a product or service and getting it into the hands of the customer.

2. Support Activities

Business activities that facilitate the creation of the product or service and its transfer to the customer

Fit Approaches

It emphasis on how strategy fit with firm and its external environment. Using “product life cycle” to analyze how firm fit with environment.

Portfolio Analysis

It is an extension of product life cycle concepts. It starts with the assumption that a firm has multiple products and that those products are at different states of their life cycles. Portfolio analysis is an attempt to determine where various products currently are in their life cycles.

One of the portfolio analysis is the BCG matrix, developed by the Boston Consulting Group. The tool requires managers to assess the market attractiveness of a particular product or business and the attractiveness of the current position in the market, primarily in terms of market share.

Strategy Formulation

· Competitive advantage: the ability of a firm to win consistently over the long term in a competitive situation. For firms to have competitive advantage, they must first have comparative advantage

· Comparative advantage: the ability to do something better than most others. The tougher the others need to get to you, the higher comparative advantage you have.

Strategies for comparative advantage

1. Cost leadership: General players whose product or service features command industry average prices but whose costs are below the industry average.

2. Differentiation: niche players with average prices and below-average costs that focuses on a segment of customers or specific geography.

3. Cost focus: General players whose product or service features command premium prices and whose costs are at the industry average.

4. Differentiation Focus: Niche players with average costs but commanding premium prices that focus on the high end and customers in a general or specific geography.

Strategy Implementation

1. Strategy: Plan or course of action leading to the allocation of firm’s resources to reach identified goals.

2. Structure: The ways people and tasks related to each other.

3. Shared Values: The significant meanings or guiding concepts that give purpose and meaning to the organization.

4. Systems: Processes, procedures, performance measurement, reward systems, planning and budgeting, and the way people relate to them.

5. Skills: Organizational competencies, including the abilities of individuals as well as management practices, technological abilities, and other capabilities that reside in the organization

6. Style: Leadership style and overall operating style of the organization (how people work and interact with each other)

7. Staff: Recruitment, selection, development, socialization, and advancement of people in the organization.

Group Activity

Choose the company that you like the most. Do the BCG matrix for the company’s products.

Example:

Individual and Group Decision Making

Decision-Making Concepts

A process of specifying the nature of a particular problem or opportunity and selecting among available alternatives to solves a problem or capture an opportunity.

Individual Decision Making

The Rational / Classical Model: a seven-step model decision making that represents the earliest attempt to model decision processes

· Step 1 : Identify Decision Situations

· Step 2 : Develop objectives and criteria

· Step 3 : Generating Alternatives

· Step 4 : Analyze alternatives

· Step 5 : Selecting Alternatives

· Step 6 : Implementing the Decision

· Step 7 : Monitoring and Evaluating Results

Type of Decisions

1. Programmed decision: a standard response to a simple of routine problem. It is usually made through structured bureaucratic techniques, such as standard operating procedures (SOP). SOPs specify exactly what should be done-the sequence of steps and how each step should be performed.

2. Nonprogrammed decision: a decision about a problem that is either poorly defined or novel. Unlike programmed decision, nonprogrammed decision must be made by managers using available information and their own judgment, often under considerable time pressure.

Group Decision Making

1. Impact of groups on decision making

· In establishing objectives, groups are typically superior to individuals in that they bring greater cumulative knowledge to problems.

· In identifying alternatives, individual efforts ensure that different and unique solutions are identified from various functional areas that later can be considered by the group.

· In evaluating alternatives, group judgment is often superior to individual judgment, because it involves a wider range of viewpoints.

· In choosing alternatives, involving group members often leads to greater acceptance of the final outcome.

· In implementing the choice, individual responsibility is generally superior to group responsibility. Whether decisions are made individually or collectively, individuals perform better in carrying out the decision than groups do.

Strategies for improving decisions making

· Brainstorming: a process of generating many creative solutions without evaluating their merit.

· Nominal group technique: a process of having group members record their proposed solutions, summarize all proposed solutions, and independently rank solutions until a clearly favored solution emerges.

Group activities

Give 5 examples of cultural values that you think can affect decision making?

i.e. “losing face” in Asian culture

Organizational Structure

Principles of organizational structure

· Organizational structure: the sum of the ways an organization divides its labor into distinct tasks and then coordinates them

· Organizational design: the process of assessing the organization’s strategic objectives and environmental demands and then determining the appropriate organizational structure

· Organizational charts: graphics illustrating relationships among units and lines of authority through the use of labeled boxes and connecting lines

Factors associated with structures

· Differentiation: the extent to which tasks are divided into subtasks and performed by individuals with specialized skills

· Integration: the extent to which various parts of the organization cooperate and interact with each other

· Formalization & Informalization: formal system specify clear lines of authority within an organization, or who reports to whom. While informal system has no specific lines of authority.

· Centralization & Decentralization: centralized organizations tend to restricted decision making to fewer individuals, usually at the top of the organization. In contrast, decentralized organizations tend to push decision-making authority down to the lowest possible level.

Type of differentiations

· Cognitive differentiation: people in different units within the organization think about different things and think about similar things differently.

· Horizontal differentiation: the specialization of tasks across the organization. It gives you more specialized knowledge, but can make coordination across departments difficult.

· Vertical differentiation: tasks are subdivided and carried out by specialized individuals from the top to the bottom of the organization’s hierarchy.

Organizational Structures

1. Functional Structure: organizes the firm around traditional functional departments. It separates the specialized knowledge of each function area.

· Strengths

· Lowers headquarters-subsidiary conflicts

· Increase international orientation of all managers

· Facilitates coordination within function

· Effective when market demands are similar

· Weaknesses

· Often creates problems in cross-functional coordination

· Slower response to specific market changes

· Ineffective when international market demands differ

2. Geographic/Regional Structure: the regional executives are generally responsible for all functional activities in their regions.

· Strengths

· Facilities local responsiveness

· Develops in-depth knowledge of specific regions/countries

· Creates accountability by region

· Facilitates cross-functional coordination within regions

· Weaknesses

· Often creates cross-regional coordination difficulties

· Can inhibit ability to capture global scale economies

· Duplicates resources and functions across regions

3. Product Structure: firm is organized around specific products with each product division is generally treated as a profit center

· Strengths

· Facilitates cross-functional coordination for a given product

· Facilitates ability to capture global economies of scale by product

· Weaknesses

· Duplicates resources by product division

· Can inhibit cross-product coordination

4. Division structure: an extension of a product structure. All functional activities are placed within a division, which is typically formed by grouping several related products together.

· Strengths

· Reduces resource duplication

· Facilitates cross-product coordination

· Facilitates cross-regional coordination

· Weaknesses

· Can inhibit cross-divisional coordination

· Can obscure global economies of scale

5. Customer Structure: structure is organized around categories of customers

· Strengths

· Facilitates coordination across functions and regions by customer

· Effective if customer classifications are significantly different

· Weaknesses

· Less effective if differentiation between customers diminishes

· Less effective if differences exist within a customer category across countries

6. Matrix Structure: two organization structures superimposed on each other.

· Strengths

· Increased information flow throughout organization

· Balanced orientation

· Weaknesses

· Increased conflict potential

· Ambiguity of authority

Managing Human Resources

General Framework of HRM

Environment and HRM Practices

1. External Environment

· Laws and Regulations: i.e. A group of flight attendants for Delta Airlines filed suit because Delta had weight limits for flight attendants. The suit claimed discrimination because while the weight limits were applied to all flight attendants, both male and female, there were no similar standards applied to pilots. Thus, Delta later dropped the weight requirements for all flight attendants.

· Customers: what the customer wants can have a significant impact on the type of people the organization needs to hire.

· Competitors: What are their competitive advantages? How much attention do they pay to other competitors?

· Suppliers: can affect hiring and training HR. For example, if the company what to maintain its cost competitiveness, they may have to hire purchasing staff with stronger global orientation and training them in area such as international negotiation and cross-cultural communication.

· Economy: i.e. unemployment rates can have a significant impact on wages and benefits that companies may have to pay to attract qualified candidates.

2. Internal Environment

· Products and Services: how complex or simple is the product or service? This have a significant influence on recruiting, selecting, training, and compensation.

· Organizational Culture: values of organization can influence behavior of members. i.e. progressive or aggressive?

HRM Goals

1. Getting the right people

· Planning: Assessing the future human resource needs and creating plans for how to fulfill them. The keys objective is to determine how many and what type of employees the firm needs at a point in the future. For example, if the shortage of employment is likely to happen in the near future, the company may move operation offshore.

· Job Analysis: determination of the scope and depth of jobs and the requisite skills, abilities, and knowledge that people, need to perform their jobs successfully. For example, in order to fulfill customer preferences, Motorola needs to increase their product quality. To producing high quality product, the factory needs high skills workers. Thus, the manager faced the decision of whether to train the existing employees or let some of them go and replace them with more capable employees who could handle the new quality control systems and procedures.

· Recruiting: determining the desired candidate pool and attracting candidates to the organization and the specific open positions. The method of recruiting consists of...

· Job Posting: an internal recruiting method

· Advertisement

· Employment Agencies

· Employee Referrals

· School Placement Centers

· Selecting: determine which candidate is the best for the job. The techniques include...

· Interviews

· Work sampling – perform a sample task and then evaluate it.

· Written tests – cost effectively to a large number of job candidates

· Background and reference checks

· Physical Examinations – be used especially in the company tat has high physical demands.

·

2. Maximizing the performance and potential

· Socialization and Training

· Orientation – opportunity for an organization to shape the expectations and behavior of new employees

· On-the-job Training techniques (OJT) – i.e. job rotation, problem-solving conferences, special assignment, etc.

· Off-the-job Training techniques – i.e. classroom based program which may take only an hour, or several weeks by in-house experts or by outside experts.

· Job Design: the structuring or restructuring of key job components.

· Performance Appraisal: concern with ...

· Establishing performance objectives and standards

· Measuring performance against those standards, and

· Providing feedback to employees concerning that measurement and evaluation

· Compensation: pay structure – a range of pay for a particular position or classification of positions. There are two types of pay structure.

· Career system and development

Challenges for effective HRM

1. Workforce Diversity

· Know yourself – understanding of differences in cultures.

· Prepare yourself and your employees

· Provide support

· Guide behavior

2. Competition:

· Customer orientation - the higher customer demands or expectation, the higher competition.

· Empowerment – allows the lower position (which is more closely with customers) to make a decision in order to satisfy customer needs.

· Time-based competition – shorter product life cycle, quicker responses to customer complaints, etc.

3. Dual Careers: in this case means couples work full time in their job. The problem usually occurs with the relocation from one part of the country to another. Sexual Harassment: i.e. actions that create a “hostile environment” such as jokes, touching, comments, pictures, and other means of communicating unwanted sexual innuendo.

· Activity

Arrange a group of 4 people. A group will be divided into 2 pairs (2/2) in order to play ‘Team A’ and ‘Team B’. Team A will perform as HR officers. Team B will perform as Financial officer. Both teams need to negotiate until you have agreed on at least one point.

Motivation

Basic motivational concepts

· Motivation—the forces within the individual that account for the level, direction, and persistence of effort expended at work.

· Reward—a work outcome of positive value to the individual

· Extrinsic rewards—valued outcomes given to someone by another person.

· Intrinsic rewards—valued outcomes that occur naturally as a person works on a task.

Types of Motivation Theories

· Content theories: Human needs and how people with different needs may respond to different work situations.

· Process theories: How people give meaning to rewards and make decisions on various work-related behaviors.

· Reinforcement theory: How people’s behavior is influenced by environmental consequences.

Types

Focus

Theories

Content theories

· Personal needs

· Work environment that satisfy needs

· Maslow’s Need Hierarchy

· Herzberg’s Two-Factor

· McClelland’s Acquired Needs

Process theories

How people give meaning to rewards and make decisions on various work-related behaviors

· Equity

· Expectancy

Reinforcement theory

How people’s behavior is influenced by environmental consequences

· Positive

· Negative

· Punishment

· Extinction

Content Theories

1. Maslow’s Need Hierarchy

It is developed by Abraham Maslow.

· Lower-order and higher-order needs affect workplace behavior and attitudes.

· Lower-order needs:

· Physiological, safety, and social needs.

· Desires for physical and social well being.

· Higher-order needs:

· Esteem and self-actualization needs.

· Desire for psychological growth and development.

Opportunities for satisfaction in Maslow’s hierarchy of human needs

2. Two-Factor Theory

It is developed by Frederick Herzberg. It also focuses on the presumed different effects of intrinsic job factors (motivators) and extrinsic situational factors (hygiene factors).

· Hygiene factors:

· Elements of the job context.

· Sources of job dissatisfaction.

· Satisfier factors:

· Elements of the job content.

· Sources of job satisfaction and motivation.

Herzberg’s Two-Factor Theory

3. Acquired Needs Theory

It is developed by David McClelland. People acquire needs through their life experiences. Needs that are acquired:

· Need for Achievement (nAch): Desire to do something better or more efficiently, to solve problems, or to master complex tasks. People high in (nAch) prefer work that:

· Involves individual responsibility for results.

· Involves achievable but challenging goals.

· Provides feedback on performance.

· Need for Power (nPower): Desire to control other persons, to influence their behavior, or to be responsible for other people. Personal power versus social power. People high in (nPower) prefer work that:

· Involves control over other persons.

· Has an impact on people and events.

· Brings public recognition and attention.

· Need for Affiliation (nAff): Desire to establish and maintain friendly and warm relations with other persons. People high in (nAff) prefer work that:

· Involves interpersonal relationships.

· Provides for companionship

· Brings social approval.

Comparison of Maslow’s, Herzberg’s, and McClelland’s motivation theories

The Process Theories of Motivation

How people make choices to work hard? Choices are based on:

· Individual preferences.

· Available rewards.

· Possible work outcomes.

Types of process theories

1. Equity theory

This theory was developed by J. Stacy Adams. When people believe that they have been treated unfairly in comparison to others, they try to eliminate the discomfort and restore a perceived sense of equity to the situation.

· Perceived inequity.

· Perceived equity.

Equity theory and the role of social comparison

2. Expectancy theory

The theory was developed by Victor Vroom. Key expectancy theory variables:

· Expectancy — belief that working hard will result in desired level of performance.

· Instrumentality — belief that successful performance will be followed by rewards.

· Valence — value a person assigns to rewards and other work related outcomes.

Elements in the expectancy theory

Reinforcement Theory

Fundamentals of reinforcement theory …

· Reinforcement theory focuses on the impact of external environmental consequences on behavior.

· Law of effect — impact of type of consequence on future behavior.

· Operant conditioning:

· Developed by B.F. Skinner.

· Applies law of effect to control behavior by manipulating its consequences.

1. Positive reinforcement: Increases the frequency of a behavior through the contingent presentation of a pleasant consequence.

2. Negative reinforcement: Increases the frequency of a behavior through the contingent removal of an unpleasant consequence.

3. Punishment: Decreases the frequency of a behavior through the contingent presentation of an unpleasant consequence.

4. Extinction: Decreases the frequency of a behavior through the contingent removal of an pleasant consequence.

Reinforcement approaches and their effects

Approaches

Positive

Negative

Managerial Action

Provide desirable consequence

Remove undesirable consequence

Effect

Increase probability of behavior being repeated

Increase probability of behavior being repeated

Example

Highway construction supervisor receives bonus for each day a project is completed ahead of schedule.

Management stops raising output quotas each time workers exceed them

Approaches

Punishment

Extinction

Managerial Action

Provide undesirable consequence

Remove desirable consequence

Effect

Decrease probability of behavior being repeated

Decrease probability of behavior being repeated

Example

Habitually tardy crew member is fined the equivalent of one hour’s pay each day he is late to work

Group member stops making unsolicited suggestions when team leader no longer mentions them in group meetings.

Communication and Negotiation

Communication is the process of transferring information, meaning, and understanding form sender to receiver. There are 5 elements in communication:

· Sender: is a person who construct a message (encoding)

· Medium: is the mode or form of transmission of a message

· Message: is the content that you want to communicate

· Receiver: is a person who interpret a message (decoding)

· Noise: distractions that interfere with the message.

Modes of Communication

Verbal Mode

Nonverbal Mode

Oral

Written

Examples

· Conversation

· Speeches

· Telephone calls

· Videoconferences

· Letters

· Memos

· Reports

· E-mail

· Fax

· Dress

· Speech intonation

· Gestures

· Facial expressions

Advantages

· Stimulating

· Commands attention

· Difficult to ignore

· Flexible

· Adaptive

· Decreased misinterpretation

· Precise

· Effectiveness of communication increases with congruence to oral presentation

· Can emphasize meaning

Disadvantages

· Transitory

· Subject to misinterpretation

· Precision loss in Translation

· Inflexible

· Easier to ignore

· Meanings of nonverbal communication not universal

The Organizational Context of Communication

1. Directions of Communication within organizations

· Downward communication: is sent from higher organizational levels to lower one (i.e. from top executives to its employees.)

· Upward communication: is sent from lower levels to higher levels (i.e. from employees to supervisors.)

· Lateral communication: is sent across essentially equivalent levels (i.e. from product a manager to product B manager.)

2. Channels of Communication within Organizations

· Formal channels: routes that are authorized, planned, and regulated by the organization and that are directly connected to its official structure

· Informal channels: routes that are not prespecified by the organization but that develop through typical and customary activities of people at work

Barriers to Communication

1. Interpersonal Barriers

· Selective perception: the process of screening out some parts of an intended message because they contradict our beliefs or desires.

· Frames of reference: existing sets of attitudes that provide quick ways of interpreting complex messages

· Emotion

· Language

· Nonverbal cues

2. Organizational

· Hierarchical (barriers resulting from formal structure)

· Functional (barriers resulting from difference between functional departments)

3. Cultural

· Language

· High/low context culture

· Steriotyping

· Cultural distance

Affects of barriers to communication

1. Interpersonal Barriers

· Individuals or groups

2. Organizational

· Individuals and/or groups within an organization

· Individuals and/or groups in different organizations

3. Cultural

· Individuals and/or groups in different organizations with diff. national cultures

· Individuals or groups from diff. organizational cultures

· Individuals or groups from diverse cultural backgrounds within an organization.

Guideline in dealing with cross cultural communication

· Be patient, things will not run as smoothly in a multicultural group as they will in a homogenous one. Allow people time to process information and respond.

· Be self-reflective, communication is a two-party system; try to be aware of your role in any communication difficulties (what you are saying does not mean that it will be clear to someone else)

· Remember one or more people may not be speaking in their native tongue. Try to avoid using obscure words try to refrain from using idioms or other non-literal expressions.

· Try to avoid abbreviations and acronyms (short form) such as, FYI, ASAP, NYC, Sci-Fi, etc.

· When giving someone a long number sequence, spell out the numbers rather than using shortcuts. For example, for 22555 say: “two, two, five, five, five” instead of “double two, triple five”.

· Try to be adaptable and open to new ways of communicating and using language. For example, people may want to do business in a café rather than a conference room, etc.

· When working with a diverse group, use turn taking. It is the way to encourage all members of a group to contribute.

· When working with a group that includes non-native speakers, always allow them extra time to process what is said as well as extra time to contribute to discussion.

· Be explicit in your communication, it is better to have too many details rather than too few

· Use multiple forms of communication. If you are able, after a conversation, call and/or follow up with an e-mail or memo

· When following up on a conversation, avoid using yes or no questions such as “do you understand?” or the idiomatic “do you get it?” to gauge understanding. Instead, ask someone to review the conversation or key points with you. This gives you a better way to determine their understanding of the information conveyed in the conversation

· Create a positive environment. People will communicate more easily when they feel comfortable.

· Encourage dialogue in your group. Small group activities can foster communication and promote connection between people with divergent backgrounds.

· Do not rely on either common stereotypes or consultants who are ‘experts’ in country X. For example, chances are that you would not send someone from Dallas, Texas to explain to a foreign client how to communicate effectively in New York City

Communication and Negotiation

How negotiation occurs?

When two or more parties (individuals, clubs, nations, etc) reach a position where their interests or values come in conflict with one another, there are several ways in which to resolve the conflict. If one party is significantly more dominant (powerful) than another, they could attempt to simply enforce their will on the other. At that time, negotiations will be used to find the resolution for both parties.

Negotiations Defined

Dasgupta, A (2005) defines negotiations as “the process of communicating back and forth for the purpose of reaching a joint agreement about differing needs or ideas”

Faure, G (1993) adds additional perspective in this definition: “…. negotiation is a joint decision-making process through which negotiating parties accommodate their conflicting interests into a mutually acceptable settlement”

In conclusion, negotiation is a decision-making process that contribute the agreement to both conflicting parties

Key Factors in Negotiation

1. People : differences in values, attitudes, characteristics, etc.

2. Situations of negotiation: location, physical arrangement, emphasis on speed and time, composition of the negotiating teams.

3. Negotiation process

· Stage 1: conduct b/g research, gather info., plan strategy and tactics

· Stage 2: establish comfortable working relationships with the other side

· Stage 3: learn about needs and demands of their counterparts

· Stage 4: focuses on attempts to modify the position of the other party and to influence that side to accept the negotiator’s desired set of exchanges

· Stage 5: reasonable progress has been made, compromises and concessions are made that permit each party to take away something of value.

Control

The Control Function in Management

Control is a regulation of activities and behaviors within organizations; adjustment to specifications or objectives. Managers should always keep in mind that control is a means to a goal and is not the goal itself. The managerial function of control comes at the end of a chain of the other major functions of planning, organizing, and leading. If those prior function work well, control tends to work well.

Results of control efforts can improve the planning process or organization. Control is thus part of a feedback loop into planning and organizing that can help managers adapt to changing circumstances and conditions.

Control’s Feedback Loop

When either the internal or external organizational environment changes, good control systems led managers know if the current ways of operating are still meeting objectives.

The Basic Control Process

1. Establish Standards: the top positions need to formulate broad strategic goals for the organization.

2. Measure Performance: the actions of people and equipment that the organization wants to monitor. Issues include:

· Can measurement criteria be quantified?

· Can expensive, but noncritical, controls be eliminated?

· Is there consensus among those involved as to how performance will be measured?

· Are all necessary aspects of actions contributing to performance being measured?

Example, when there is a financial crisis in a company, mostly manager will control costs first.

3. Compare Performance against Standards: in order to draw appropriate conclusion

4. Evaluate Results and take action: manager need to consider whether any single comparison or a pattern of comparisons require action to be taken.

Outcome of performance measurement

Scope of Control in the Organization

· Strategic Control: assessment and regulation of how the organization as a whole fits its external environment and meets its long-range objectives and goals.

· Tactical Control: assessment and regulation of the day-to-day functions of the organization and its major units in the implementation of its strategy

· Financial control:

· Return on investment (ROI): measure of profitability obtained by dividing net income by the total amount of assets invested

· Return on equity (ROE)

· Liquidity: measure of how well a unit can meet its short-term cash requirements

· Break-even point (B/E): amount of a product or service that must be sold to cover a firm’s fixed and variable costs

· Budgetary Control: based on responsibility for meeting financial targets and evaluating how well those targets have been met

· Supervisory structure: based on reporting levels in an organization

· Human resource policies and procedures: based on the organization’s overall approach to utilizing its human resources

· Bureaucratic control: stresses rules and regulations

· Operational Control: assessment and regulation of the specific activities and methods an organization uses to produce goods and services

· Total Quality Management: an approach to control that integrated quality objectives into all management functions to continually achieve superior quality

Group Activity

Choose one company and then draw TQM model of that company.

Operations and Information Technology Management

The Operations Management Function

A specialized field of management associated with the conversion or transformation of resources into products and services. For example: software development.

Operations management and strategic planning

Operations strategy is influenced by the long-term competitive strategies. Specifically, operations strategy translates market needs into objectives.

Example: Nike is being the market leader in innovative athletic-shoe designs means operations must be prepared to start and stop the production of particular shoe model quickly.

Examples of Competitive Priorities

Category

Priority

Description

Role of OM

Examples

1. Cost

Low-cost operations

Converting low-cost into lower prices can increase demand for products and services

Managers must address all high-cost resources. To lower costs, an additional investment in automated facilities and equipment may be needed

Generic canned foods

2. Quality

High-performance design

Include superior features, safety of products and services, convenient access to service locations

Managers must convert marketing demands into products and services desired by their customers. Quality built into the original design is of key importance

Volvo cars known for safety

Category

Priority

Description

Role of OM

Examples

3. Time

On-time delivery

Measures how often delivery-time promises are met.

Managers must use key HR and automated equipment to meet strict delivery times without allowing quality to suffer

Pizza delivery

Federal Express

4. Flexibility

Customization

The ability to meet the needs of each customer, as well as changing product or service designs

Managers must ensure that they have a flexible and well-trained workforce. Flexible equipment and facilities are also needed.

Custom-designed swimming pool

Cosmetic surgery

Information Technology Management

· Information Technology (IT): computer hardware and software and associated communication equipment that perform data processing tasks.

· Data: raw facts figures about an entity or event.

· Information System: combination of information technologies, people, and procedures organized to provide information for its users

Example of using IT in order to obtain data:

Grocery stores can obtain information about customers’ purchases through an electronically scanning machine.

Types of Information Systems

1. Information Systems for Daily Operations

· Transaction Processing Systems (TPS): Information systems that perform and track the day-to-day tasks of an organization (traditional system)

· Electronic Data Interchange (EDI): method of sending data from one firm’s computer to the computer at another firm

· Office Information System: information systems that focus on communication within the office

2. Managerial Support Systems

· Management Information Systems (MIS): management support systems that produce scheduled reports primarily used by operational and mid-level managers (has historical data for comparison between one period’s activity and prior periods)

· Decision Support Systems (DSS): program designed to help a specific manager solve a semi or unstructured problem. Example, after a fire destroys a plant, a manager needs to decide whether to rebuild or expand another existing plant. Thus, the system should be easy to learn and use.

· Executive Support System (ESS): information systems designed to provide executives quick access to corporate and external data. For example, a product manager might want to view clothing sales for this year compared with last year, then drill down to see the details on one particular line in one specific sales region.

· Groupware, or Group Support System (GSS): software designed to help people work collaboratively as well as individually through information sharing (i.e. sharing information between departments)

Ethical Issues in the Use of IS

· Privacy: do we have the right to use those data collected?

· Access: do we have the right to access information? If yes, for what purpose?

· Property: who owns information and intellectual property? May a firm sell information about its employees/customers?

· Accuracy: who is responsible for accuracy of information, and who is accountable for errors?

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